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SUPPLY CHAIN DRIVERS FOR SUPPLIER DEVELOPMENT

Changing Supply Chain Structure

Supply Chain structures are changing. Traditional Supply Chain Customer and Supplier tier structures are being replaced by more complicated cross-over and loop backs and multiple Supply Chain relationships within tangled Supply Chain Networks. Within such networks, Suppliers now constitute up to 85% of the content value with Customer dependencies only escalating. For Suppliers, the challenge of demonstrating value amid such complexity becomes more difficult as Supply Chain management and operational practices mature. For Large Corporations, the need to segment Suppliers by their content value becomes an operational imperative. Thus, the need for collaboration with Suppliers around the basic Supply Chain processes of Plan, Source, Make, Delivery, Return, and Enable dominates corporate strategic discussions.

Increasing Supply Chain Management Maturation

IT is driving Supply Chain clock-speeds as more and more data is demanded both internally and from Suppliers so as to deliver products on-time, in the right place, in the right quantities, and to the right consumer - amid the potential for supply chain disruptions and performance failures. In alignment with its Customer’s performance driven strategy, Suppliers too must develop and implement its own Supply Chain Strategy in order to compete and sustain engagement. Like their Customers, Suppliers must learn to measure its upstream performance and compete at unique Supply Chain product levels while also maturing across their own Whole Enterprise. Like their Customers, Suppliers too have a downstream Supply Chain that must be managed. The reality, however, is that if upstream and downstream Supply Chain processes are not being measured, it really does holds true that they cannot be managed. Whether or not Customers have the conversation with Suppliers, they know Suppliers that can or cannot.

Strategic Sourcing

Strategic Sourcing requires the selection of Suppliers based on value to the whole Supply Chain. Suppliers that remain transactional and choose only to compete on cost assures them of being the actual and/or the perceived weak link in a Supply Chain. Once value can be both measured and managed, Suppliers can and must compete as value-added Suppliers that just happen to be diverse.

Summary

Supplier Development and Continuous Improvement are keys to sustainable competitive positioning and the development of spend.